Report: Puget Sound lost nearly 7,000 jobs, losing competitive edge

Washington’s economic standing has slipped significantly on national scorecards, dropping from first to eleventh place in overall business rankings since 2017. Former Governor Christine Gregoire, who now serves as the CEO of Challenge Seattle, warns that local leaders can no longer rely on the region’s historic assets to automatically attract and retain major employers.

Stalled Growth and Regional Job Losses in King, Pierce, Snohomish, and Kitsap Counties

Following two consecutive years of stagnant job growth, the four-county region lost nearly 7,000 jobs in 2025 even as national employment continued to expand. It marks the first time regional employment has dropped annually outside of a broad economic downturn in at least twenty years.

Unemployment in the central Puget Sound area sits at 5.2 percent, hovering roughly a percentage point above the national average. At the same time, Washington’s cost-of-doing-business ranking tumbled from thirty-second to forty-seventh according to the report. Business leaders point to a combination of cumulative pressures, including the lowest five-year business survival rate in the country and slower venture capital growth than peer metropolitan regions.

Corporate Shifts and Real Estate Retrenchment Across Seattle

High-profile corporate decisions are reshaping the local employment landscape. Starbucks plans to create up to 2,000 support jobs over the next five years at a new $100 million office in Nashville, Tennessee. While the coffee giant emphasizes that Seattle remains its global headquarters, select teams are relocating as part of a strategy to sit closer to suppliers, talent pools, and retail expansion in the South and East. Some Seattle employees reportedly faced layoffs after declining to make the move.

Amazon is also scaling back its physical footprint, planning to vacate an 81,000-square-foot office in South Lake Union when its lease expires next year. The move reflects a broader corporate effort to reduce leased office space in the city. Meanwhile, the region’s banking sector saw a shift when WaFd Bank announced a merger with Jacksonville, Florida-based EverBank alongside plans to quietly move its holding company offices from Seattle to Bellevue.

Rising Regulations and Tax Pressures Compounding Business Costs

The business alliance report attributes the downturn not to a single tax or policy, but to an accumulation of rising operating expenses, expensive housing and childcare for workers, and accelerated regulatory growth. State agencies adopted approximately 71 percent more regulations last year than in 2015, pushing Washington past many peers to become the eighth most regulated state in the nation with over 200,000 rules on the books.

State and local business taxes have climbed sharply since 2020. Gregoire noted that corporate leaders require predictability to make long-term investments.

“They make decisions based on: can we expect what is going to happen tomorrow in our place where we are right now? If we can’t, then they look hard at, should we stay, should we expand here, or go elsewhere?”

A Shared Economic Plan and the Road Ahead for Local Leaders

To reverse the trajectory, Challenge Seattle outlines several remedial goals for regional counties and municipalities. The proposals include establishing a unified economic vision, implementing business concierge services in every city, creating clearer permit timelines, developing more predictable tax strategies, and partnering with local colleges to strengthen workforce talent pipelines.

The report’s release follows a separate letter sent by 35 major Seattle business figures urging Mayor Katie Wilson and the City Council to take immediate action on public safety. Whether elected officials across the four counties can forge a cohesive strategy to restore competitiveness remains the central question for the region’s economic future.